Why Is the US Losing the Green Race?

Last week’s finger wagging over the Obama administration’s failed clean-energy investment in Solyndra, the solar company that filed for bankruptcy, contrasted with reporting this week on the oil industry’s rush to develop new wells all over the Americas, from Canada to Colombia. While China’s rising demand for oil is a huge driver in the Latin American boom, the Chinese government is also providing huge subsidies to its green technology industries. In Europe, Germany is the world’s first major renewable energy economy. The United States seems to be lagging in this competition. The New York Times Room for the Debate asks, why is that, since the U.S. has often been the global innovator in emerging fields? What should the government be doing differently? AEI’s Steven F. Hayward issued the following response.

President Obama’s now infamous speech saying, “the true engine of economic growth will always be companies like Solyndra … leading the way to a brighter, more prosperous future” will go down on the list of risible executive pronouncements alongside Herbert Hoover’s “prosperity is just around the corner”; Dick Cheney’s “the insurgency is on its last legs”; and the Lyndon Johnson-era’s “light at the end of the tunnel” in Vietnam. And for the same reason: the presumption of mastery over real-world limitations that simply won’t conform to our wishful thinking.

Defenders of green energy investments are probably hoping that the Solyndra debacle can be attributed to corrupt or illegal influence from the White House, lest it discredit all government support for green energy. Already, these people are saying that Solyndra’s failure amounts to only about 2 percent of the $38 billion of the green energy loan guarantee program.

The U.S. should stop throwing taxpayer money at forms of advanced energy that are not practical or scalable.

My, how far we’ve come since 1979, when we had a serious national debate about whether it was appropriate at all for the government to provide a mere $1.5 billion loan guarantee to Chrysler–a legacy company with more plausible prospects for profitability than Solyndra. Opponents said that once the government started backstopping business, it would undermine the discipline of the marketplace and create a moral hazard. Now we’re bailing out auto companies again and handing out billions in loan guarantees like Halloween candy to shaky start-ups, with scarcely any debate. Looks like the Chrysler loan critics had a point.

The shame of it is that the Obama administration can point to more promising initiatives in energy, especially the Department of Energy’s Advanced Research Projects Agency-Energy (modeled after the Pentagon’s Defense Advanced Research Projects Agency). But ARPA-E’s total budget was only $400 million in its first year–less than the Solyndra loan.

When contemplating their mistakes on energy innovation and the economy in general, Obama and his fellow progressives ought to heed the lesson that came too late to Lyndon Johnson: “Light at the end of the tunnel? We don’t even have a tunnel; we don’t even know where the tunnel is.” We should admit that we’re still far away from knowing what forms of advanced energy will prove practical and scalable, and stop throwing taxpayer money after today’s uncompetitive technologies.